Chinese Manufacturers Eye Thin-film PV Market

Shanghai, China [RenewableEnergyWorld.com]
Increasingly thin-film photovoltaics (PV) operations are popping up across China, indicating active development in this sector, which is expected to provide affordable solar power and be used widely in the future.

“As domestic polysilicon price rose, the production cost of silicon-based solar cell module in 2008 was at some point 4-5 times higher than that of thin film modules,” Jiang Qian, principal energy analyst at Shenzhen Zhongzhe Investment Consulting Co., said.

“Despite the fact that China’s polysilicon price slumped from US $480 per kilo in 2008 to US $60 per kilo now, thin-film producers still enjoy price advantage as its production cost is 20% less than that of silicon modules,” continued Mr. Jiang.

In addition, it is expected that the production cost of thin-film will continue dropping, as Chinese producers are now putting more resources into R&D and partnering with manufacturing equipment suppliers.

“Our production cost of each watt of thin film is about 8 yuan,” said Dr. Liyou Yang, CEO of Astronergy Solar. “But in 2011 or 2012, we can cut the production cost to about 4 yuan per watt, by technology improvements and developing a domestic supply chain to reduce the cost of raw materials and equipment.”

Wanting to capitalize on this declining production cost, Astronergy Solar plans to increase its annual thin-film capacity from 30 MW now to around 1,000 MW in the next three years, a rise of 3,233%, according to Dr. Yang.

Astronergy is not alone. More and more Chinese PV producers are also starting to target the thin-film sector. In November, Jiangsu-based Best Solar High-Tech Co., Ltd., finished constructing two production lines with a total capacity of 130 MW thin film.

See the table below for a list of some of the Chinese thin film PV manufacturers that have already started producing product.

The rising demand in thin film is also being driven by its technical advantages — such as tolerance to harsh environment, better performance in lower light conditions and flexibility — over its “thick-film” counterparts. This is luring Chinese PV manufacturers that want to better answer market needs aboard and at home into the thin film sector.

For example, Hebei-based Baoding Tianwei Group Co., Ltd., a silicon module producer, established its first thin-film subsidiary in 2008 and recently signed a three-year contract with Thai Green Energy Co., Ltd., in which more than 70 MW of thin film will be supplied for the Southeast Asia market.

Along with overseas orders, the Chinese market growth also contributes to thin-film sales.

Astronergy broke ground on a 10-MW solar farm in Ningxia province, in which 3 MW of thin film will be used. According to Dr. Yang, the company CEO, the Chinese market is expected to account for one third of the total thin-film sales in 2012, while the U.S and Europe will also account for a third each.

In the domestic market, thin film is well suited to large-scale solar farm projects in China’s five northwestern provinces and Inner Mongolia, due to vast available land and harsh climate conditions there, said Jiang Qian, Zhongzhe Investment Consulting’s analyst.

Also, demand for thin film will increase with the development of China’s Building Integrated Photovoltaics (BIPV) projects, said Zhang Shuai, analyst at Chengdu-based Sinolink Securities Co., Ltd. For example, thin film has been installed for the 58 m² sunroof and 265 m² curved building wall of Astronergy’s 2-MW PV project in Hangzhou.

Challenges Ahead

U.S. First Solar enjoys great success as a top thin-film producer, but it is hard for Chinese thin film producers to achieve the same, due to their limited production scale, shortage of advanced technology and heavy reliance on imported equipment and raw materials.

Shenzhen Topray Solar Co., Ltd., a top Chinese thin-film producer that self-developed 70% of its production equipment, had a gross margin of 23.8% during the third quarter of 2009. However, at the same time, First Solar’s gross margin was 50.9%.

While, other thin film producers that fail to develop their own production equipment may face a worse situation.

Most of China’s thin-film manufacturers have to buy expensive equipment from foreign companies such as U.S. Applied Materials, Switzerland’s Oerlikon and Japan’s Ulvac Inc., making their upfront investment ten times higher than that of silicon module producers, according to Sinolink Securities’s analyst Zhang.

Also, China’s thin-film producers greatly depend on foreign suppliers, which could potentially cause short supply in major raw materials such as target materials, conductive glass and silane gas, said Zhang. His research shows that Germany’s Heraeus supplied over 60% of China’s target materials in 2008. In terms of conductive glass, Japan’s NSG Group and U.S. AFG Industries, Inc. hold a large market share in China, he said in a report.

Yotam Ariel is an independent business consultant solely focused on solar PV. Based in Shanghai and fluent in Chinese, he has been conducting business in China for more than 4 years, assisting his international clients with market intelligence and government issues such as regulations and incentives. He is highly active in the renewable energy and greentech circle, keeping a close eye on this highly dynamic industry. Coco Liu is a professional writer, primarily covering energy and agribusiness in China.

Astronergy and most of these aspiring Chinese thin-film producers are in trouble. Cost of manufacturing of 8 yuan per Watt ($1.17 per Watt) is simply too high for a 9%-efficient module (Oerlikon's thin-film modules should have better kWh/kW performance than crystalline, but that's offset by the higher long-term performance degradation) - their costs need to be below $0.75 per Watt to be competitive with First Solar's thin-film costs.

Thin-film photovoltaics are going to change solar power production around the world. The Chinese are at the cutting edge of this technology, and they will have the industry leaders in the field. Green jobs will flourish there, will the rest of the world pays the price for their green tech developments. If you're interested in solar energy, check out http://www.greencollareconomy.com. It has hundreds of case studies on emerging green technology and thin film research. It's also the largest b2b green directory on the web.

The present stage of thin film production in China might be compared to its position in the wind industry a few years ago. At that time, China was dependent upon multinationals for its technology and was using wind turbine designs provided by other countries that were several years behind the time. Since that time, China has committed seriously to the study of wind technology and even has university level classes and even a college for this purpose. The passage of a law requiring a certain percentage of parts for wind generators to originated in-country has helped in the transition away from other country dependency.

The same may be said of the present level of thin film technology. China must presently depend, for the most part, on equipment and technology from other countries provide. As the level of expertise increases in China, there may also be a day when a law is passed to insure that equipment used for the thin screen process will be designed and manufactured in China so that dependency upon other countries will be lessened. The development of equipment to produce raw materials necessary to production should also be addressed.